GBP/USD Signal Today 10/06: Rising Wedge Pattern (Chart)

(MENAFN- Daily Forex) Bearish view

• Sell the GBP/USD pair and set a take-profit at 1.3435.
• Add a stop-loss at 1.3700.
• Timeline: 1-2 days.

Bullish view

• Buy the GBP/USD pair and set a take-profit at 1.3700.
• Add a stop-loss at 1.3435.

The GBP/USD exchange rate remained in a tight range ahead of the US and UK inflation and jobs numbers. It was trading at 1.3560 on Tuesday, a few points below the year-to-date high of 1.3615.

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The GBP/USD exchange rate moved sideways ahead of the upcoming UK nonfarm payrolls (NFP) data. Economists expect the data to show that the British economy added 80,000 jobs in April, a drop from the 112k it added a month ago.

They expect the unemployment rate remained at 4.5%, while the claimant count change rose to 10,000. These numbers come two days before the release of the UK GDP, industrial and manufacturing production, and trade numbers.

Economists expect the numbers to show that the economy stagnated in April, while the manufacturing and industrial production turned negative.

The other key economic data will come out on Wednesday when the US will publish the latest consumer inflation data. The average estimate among analysts is that the headline CPI rose from 2.3% in April to 2.5% in May, while the core figure rose from 2.8% to 2.9%.

An increase in inflation will push the Federal Reserve to maintain a hawkish tone in the next meeting. The Fed has already hinted that it will not cut interest rates until it is convinced that inflation was moving towards the 2% target.

The GBP/USD pair will also react to the outcome of the meeting between US and Chinese officials in London. Signs of progress will lower the ongoing tensions among market participants.

EURUSD Chart by TradingViewGBP/USD technical analysis

The 12-hour chart shows that the GBP/USD pair has been in an uptrend in the past few weeks. It was trading at 1.2560 on Tuesday, a few points below the year-to-date high of 1.3615.

The pair also remains above the 50-period and 25-period moving averages, a sign that bulls remain in control for now. It is also above the key support level at 1.3435, the upper side of the cup-and-handle pattern.

The risk, however, is that the GBP/USD pair has formed a rising wedge pattern, comprising of two ascending and converging trendlines. This pattern often leads to a bearish breakdown, potentially to the support at 1.3435. The MACD and the RSI point to a bearish divergence pattern. A move above this month's high of 1.3620 will invalidate the bearish outlook.

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